Mark's Mortgage Minute

Mark in the Media

(KUTV) "Business as usual" in the Utah real estate market could become business in slower motion, if the federal government shutdown drags from days into weeks.

It hinges on a not-so-little detail necessary to make most home loans happen, tax transcripts from the IRS, which verify incomes.

"You can't just walk into a lender and say, 'Here are my tax forms and here are my last two years of taxes,'" said downtown real estate broker Babs De Lay. "They have to be verified by the IRS, and if the IRS is closed, then you have a problem."

Those "no doc" and "partial doc" loans from the days before the real estate crash apparently are history for borrowers and most lenders. This seems to be a good thing in protecting against bad loans, defaults, and foreclosures.

When the government closes and the IRS according to Forbes magazine only has 10 percent of its national workforce on the job, getting a tax transcript for a new loan may be as likely as a federal income tax holiday.

At the downtown Salt Lake IRS office, the doors were locked Wednesday. Some lights were on, but it did not appear anybody was home. Signs on the exterior glass doors were apparently put there before Congress deadlocked over the Affordable Care Act. The signs advised the office would be closed in the event of a shutdown.

Moyes said there "probably will be a delay" in getting tax transcripts.

"It all depends on how long the government is shut down," he said. "If we're starting to talk beyond a week, it very likely could become an issue."

The U.S. Department of Housing and Urban Development has also put the overwhelming majority of its workers on furlough, which might impact underwriting, deciding up or down on scores of home mortgage loans.

To bypass that potential picket fence, Moyes advised to look for lenders who have in-house 'direct endorsement' underwriters. Their determinations on loans, he said, are accepted by HUD.